Tax Deduction at Source (TDS) Provisions Under GST

Rate of TDS Under GST

Central Government/State Government shall specify the categories of persons who shall have to deduct tax at source for specified transactions. The deductors have to deduct tax at the rate of 1% from the payment made or credited to the supplier of taxable goods and/or services, notified by the Central Government or State Government on the recommendations of the Council.

TDS Requirement

Deduction is required where the total value of supply under a contract exceeds INR 10 lakhs. Value of supply shall exclude the tax indicated in the invoice.

Time Limit For Deposition of TDS To Government

The amount deducted shall be paid to the credit of the Central Government or the State Government treasury as the case may be, within ten days after the end of the month in which such deduction is made. Manner of such payment may be prescribed.

TDS Certification

The deductor has to furnish a TDS certificate to the deductee stating the necessary particulars. It must be noted that there is no provision to apply for a lower deduction certificate in cases where the tax liability of supplier is NIL due to accumulated credits.

Responsibility of E-Commerce Operators

Onerous responsibility of collecting tax at source has been cast on every electronic commerce operator.

Electronic commerce operator has been defined as it shall include every person who, directly or indirectly, owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and/ or services or in providing any information or any other services incidental to or in connection there with but shall not include persons engaged in supply of such goods and/or services on their own behalf.

 As per Sec. 43C of Model Act E-commerce operator shall collect an amount at a rate to be notified from the supplier of goods time of credit of any amount to the account of the supplier of goods and / or services; or time of payment of any amount in cash; or by any other mode. Such tax must be paid in the appropriate State.

The amount so remitted by the e-commerce operator would be treated as if it is tax paid by the concerned supplier. Such operator shall also be required to file detailed return by shown all the supplies and the same shall be matched with the supplies shown by the supplier.

Tax collected at source in case of suppliers who have excess input tax credit and hence no net tax is payable will result in further accumulation. Moreover there is also no provision for seeking refund of tax so collected as Sec. 38 grants refund of only unutilized credit.

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